Today, U.S. Representatives Ed Royce (R-Calif.) and Gwen Moore (D-Wisc.), introduced H.R. 6487, the Taxpayer Protections and Market Access for Mortgage Finance Act, legislation requiring the GSEs to increase credit risk transfers (CRT) with the private sector.

“Growing private sector participation in the secondary housing market reduces taxpayer exposure to future losses. Congress should encourage Fannie and Freddie to increase the amount and the types of credit risk transfer transactions to the maximum level that is economically and commercially viable. Doing so is not only compatible with housing finance reform, it eases the way for future action," said Rep. Royce.

"I think this bipartisan legislation builds on the good work the FHFA has done in housing finance. Together, I am confident we will collectively pave the way for a stronger, more stable housing market for all Americans,” said Rep. Moore.

The underlying purposes of the bill are to require the Federal Housing Finance Agency (FHFA) to establish guidelines for Fannie Mae and Freddie Mac to engage in significant and increasing credit risk transfer transactions. The bill includes changes to commodities rules which allow the use of credit-linked notes to transfer risk from the GSEs to the private sector. It also amends existing securities and tax laws to allow real estate investment trusts (REITs) to invest in GSE credit risk bonds. Finally, the bill establishes two pilot programs to increase risk sharing transactions with small lenders and mortgage insurers.

Both authors of the legislation are senior members of the House Financial Services Committee. Full text of the bill can be viewed here.

For more information, contact:
Saat Alety (Royce) at Saat.Alety@mail.house.gov or (202) 225-4111.
Eric Harris (Moore) at Eric.Harris@mail.house.gov or (202) 225-4572.